Bruce Bisset: This is, simply, a bank robbery

Seems to me of the many ways to part a citizen from their money, giving bankers the power to steal part or all of one's savings ranks among the more despicable. Yet that is what our Reserve Bank is quietly arranging.

While shareholders and other creditors might bear some of the burden should a bank fail, the new Open Bank Resolution regime gives a statutory manager means to seize whatever proportion of depositor funds is necessary to cover all losses.

Moreover this policy, the favourite "solution" of Finance Minister Bill English, is already in place; all banks with more than $1 billion in deposits are required to adopt it by July 1.

While deputy Reserve Bank governor Grant Spencer pompously declares that "New Zealand is not Cyprus" - meaning, our banks are not under immediate threat - he should indeed note it is clear we are not, since the Cypriot parliament unanimously rejected the European Union's demands for a similar "depositor's haircut" measure there.

And unlike the one-off "tax" proposed for Cyprus of between zero and 10 per cent depending on an account's size, New Zealand's regulation has no such delineations; if a bank falls over, regardless of reason, a "conservative" - meaning, more than enough - proportion of funds will be frozen to ensure all debts are covered.

There go your life savings.

Best to hope our mostly-foreign-owned banks are solidly under-exposed to world markets, eh?

Before you ask, no, bank deposits are not guaranteed. That temporary scheme, brought in as the financial crisis broke, has expired - and will not be renewed.

So yes, as it stands a bank collapse could wipe out depositor funds anyway. But there are other methods - and targets - that could be pursued to safeguard people's money.

Such as, standard in most countries, insurance. But National has rejected this as "too costly given the low-level risk"; better to place the axe directly over savers and then pray it doesn't fall, is their logic.

Similarly direct government bailouts now apparently hold no interest, on the basis they place undue debt on general taxpayers. But all the world's major banks bailed out of late have returned to remarkably-healthy profitability; why doesn't that flow back to the bailers?

Then there's the small matter of the bondholders - the people who actually own the bank. Currently (and this continues), they hide behind the firewalls of separate once-or-more removed companies and trusts, and so dodge all liability. Moreover, as evidenced in the recovery of bailed-out banks elsewhere, they may profit hugely from magically extending further funds to restore their failure to operation.

Whereas, for the ordinary citizen, a bank is not a means to making money; it is a way to safeguard it. People put money in bank vaults primarily as a means of protection, because it's less risky than stuffing it into a mattress. Or so they think.

A depositor is not an investor, nor is a deposit a shareholding, as it has none of the usual benefits or obligations of shares. But while you may think all you are allowing in return for "safeguarding" your hard-earned cash is for the bank to use it for their own trading purposes, the bank sees it differently: in effect, as a low- or no-interest loan.

Which is how a depositor can be reclassed as a creditor if something goes wrong: loans can be defaulted.

Perhaps - whether the reality and the urban myth are the same or no - it's time to take Iceland's path and re-format the banking system into something resembling an upright, straightforward and, above all, guaranteed institution.

Else, come global meltdown, along with your money you can kiss any independent future we might dream of goodbye.